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        <title>Real Estate Blog</title>
        <link>http://www.gobrock.com/blog/</link>
        <description></description>
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            <guid>http://www.gobrock.com/blog/property-staus-definitions.html</guid>
            <link>http://www.gobrock.com/blog/property-staus-definitions.html</link>
            <author>jason@gobrock.com (Jason Brock Lewis)</author>
            <title>Property Status - Definitions</title>
            <description> <![CDATA[ 
Status Definitions


Active: 


The seller is soliciting offers through the MLS.  No offers have been accepted. This applies to traditional sales, as well as bank owned properties.


Active Short Sale:


A listing that if sold at list price, would not generate enough revenue to pay off all existing mortgages and expenses from the sale. Requires an agreement from the lender carrying the note to accept less than what was originally owed.


Active Short Sale Contingent:


The seller has accepted an offer from a qualified buyer; this offer has been sent to the bank for approval.  The seller has the option of choosing back up offers.


Pending:


Seller has an accepted an offer from a buyer with a fully executed contract agreed upon by both parties.  Property is in escrow, awaiting the close of the sale.


Pending Bring Back Up:


This can happen for a number of reasons, but some agents indicate this status until buyer has released all contingencies.  This is just in case the current buyer backs out of the contract.


Active Release Clause:


The listing was in a pending status, and the agent has been notified that the buyer is backing out of the contract. The listing agent is waiting for a release signed by both parties until the property can go back into active status.


Active Court Approval:


Usually for cases in probate or trust sales, requires approval by a court of law.


Active Court Contingent:


The listing has a buyer in place and is waiting for court approval.


Expired:


The listing has reached the agreed upon expiration date.  The property is no longer available under the current listing.


Withdrawn/Cancelled:


The seller has decided to take the property off of the market for an undisclosed reason.


Sold:


The escrow process has been completed; the seller has transferred title to the new buyer.
 ]]> </description>
            <pubDate>Wed, 02 May 2012 15:05:36 -0700</pubDate>
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            <guid>http://www.gobrock.com/blog/buying-a-sacramento-bank-owned-home-reo.html</guid>
            <link>http://www.gobrock.com/blog/buying-a-sacramento-bank-owned-home-reo.html</link>
            <author>jason@gobrock.com (Jason Brock Lewis)</author>
            <title>Buying a Sacramento Bank Owned Home (REO)</title>
            <description> <![CDATA[ 
If you are a buyer involved in the current market, chances are you have come across at least one REO property.  REO stands for Real estate Owned and it means that the property was acquired through foreclosure by the lienholder, and is now being sold in an effort to recover that lienholders losses.  While there can be some disadvantages of buying a bank owned home, one thing is for certain:  If you can handle the risk, there is a potential for some incredible deals. 


Our company has been on both sides of the transaction when it comes to bank owned homes.  We have represented many buyers, as well as had the experience of being on the listing side too.  As you know, bank owned homes continue to flood the nation’s real estate market, and if you are involved in enough if these types of transactions you start to learn the tricks to close the deal.  Below we will break down the necessary steps you need to take, as well as things you will need to consider when you decide to pursue REO’s.


 


Hire an experienced Real Estate Agent:


This is really important! In the last couple of years the offer process has seen many changes.  You will need an experienced agent who can educate you on what to expect, and what to include with your offer.  It is also important to hire an agent who is well connected, who has dealt with the listings agents in the past.  The more you know, the less surprised you will be with the process and this information should comeprimarily from your agent.  Your agent should know how much to offer based on the current market value of the home.  Your agent should also know ways to make your offer stand out and communicate with the listing agent once your offer is submitted.  Communication is key!


 


Do Your Research


Make sure you physically inspect the property.  There are many investors out there who will offer on an REO sight unseen.  However the banks have gotten smarter, and have ways of verifying that you have actually seen the property.  Have your real estate agent determine the market value of the property based on recent sales, as well as the current condition of the home.  It is also a good idea to consider pending sales prices when determining value.  You don’t want to pay too much for a property, but you also don’t want to low ball either.  Foreclosure properties are usually considered “distressed”.  It is common that a bank owned property will need significant repairs due to deferred maintenance or poor care of the home.  This might seem like a huge drawback to buying a foreclosed property, but if you can purchase at the right price, the money saved can be used towards needed repairs.  Keep in mind that the bank will not make any repairs, but you may be able to negotiate a price reduction once you are under contract.  Of course you will need to justify a price reduction with contractor bids showing what it will cost to complete the repairs.


 


 


Bank Owned Homes are sold “as-is”


Since the bank acquired the property through foreclosure, there is no way for them to disclose any property defects that may be present.  The seller will be considered “exempt” from most statutory disclosures normally required when selling a home.  Furthermore, the bank will not make any repairs needed on the home.  Normally a buyer can conduct their inspections and ask the seller in writing to make itemized repairs.  This is not the case when you are dealing with a bank owned home.  If you are a buyer who wants work completed on the property once you are under contract, expect the seller to cancel your deal and move on to another buyer who will not make any of those requests.  Sometimes you can negotiate a price reduction if you can prove the costs.   Keep in mind that a lot of bank owned properties are severely distressed and they are already priced low to reflect their condition.  Just remember that if you are buying at the right price, the money you are saving is well worth it to make repairs.


 


Have your finances in order


If you are a cash buyer in the current market, you have an upper hand when submitting offers. Being a cash buyer gives you the ability to negotiate a better deal.  Banks will prefer to deal with cash buyer because they know the transaction will be quicker, and they will recover their money in a shorter amount of time.  As a cash buyer you will need to submit proof of funds with all of your offers.  A simple bank letter is not acceptable.  You will need to show funds with something like a bank statement that shows how much cash on hand you have.


If you are planning on obtaining financing for the purchase, it is important to have a pre-approval.  You will need to submit that with your offer as well.  It is also smart to get a pre-approval with the same bank that owns the subject property.  You are not obligated to use that lender; however, it makes you a stronger buyer in the seller’s eyes.  You will also want to consider a higher down payment.  It is better to have a pre-approval letter as opposed to a pre-qual letter.


 


Make your offer as soon as possible, and make a reasonable offer


If you find a property that you are interested in, don’t delay in making the offer.  You will need to keep a sense of urgency.  Especially in a seller’s market when inventory is low.  If you wait even a day too long, chances are another buyer will have already swooped in and offered before you.


Don’t waste your time sending in low ball offers.  REOs are already priced low and sometimes list price has little or no bearing on what the bank will take.   Keep in mind that it is not a good idea to ask for “the moon” so to speak in your offer.  Banks do not pay for repairs, home warranties, etc.  Usually they have a limit on what they will be paying in closing costs as well.  Your offer on a bank owned home should be as clean as possible, if you do decide to ask for some of these things be prepared that the bank will counter all of it out.  Normally this is an extra step thatthe bank will not deal with, and they will more than likely pick a buyer that has a cleaner offer.


 


Make your offer stand out, show that you are a serious buyer


Above we were talking about submitting a “clean” offer when you decide to pursue a bank owned listing.  There are things that should not be included in the offer terms such as home warranties, etc.  However, there are a few things that should be included in your offer that will make you stand out.  You will want to consider a shorter escrow period.   If you have cash, you will not need the standard 30 day escrow required for financing.  You should indicate an escrow period of 21 days or less.  If you decide to have a home inspection (recommended), remember that the bank will not contribute anything towards repairs.  For this reason, your inspections should be for informational purposes only.  On your offer, consider shortening your 17 day inspection contingency period down to 10 days or less.  Banks like to see 7 days for inspections.  One of the other tricks has to do with your earnest money deposit (EMD).  It is always good to offer a higher EMD.  A standard EMD is 1% of the purchase price; however, by offering a hefty EMD you show that you are a serious buyer, especially if you are to obtain financing, this trick is very important.  Banks will always lean towards cash buyers, but cash buyers usually offer less than buyers who are obtaining financing.  Some banks will take a financed offer, but you will need to show that you have more skin in the game. You can do this with a high down payment and/or a high earnest money deposit.


One last thing relates to title and escrow.  Technically title and escrow is a mutual decision between the buyer and seller.  However, when you are dealing with banks you will see that they tend to go by their own rules.  If you want to pick where title is held, be prepared to pay ALL closing costs and title fees.  It is better not to rock the boat, so consider letting the bank choose title and escrow.  Even if you are ok with paying for all escrow and closing costs, there is a higher chance that your offer will not be chosen.  Unfortunate but true!


 


Expect Multiple Offers


Especially in a seller market when inventory is low.  Listings can receive 20 offers or more in some cases.  If the home is desirable and priced low, expect that many people are interested too.  Most of the homes in the Sacramento region that are listed are bank owned or “distressed” properties.  There is a potential for some great deals, but you need to develop a thick skin with your competition.  Once you make your offer, be prepared to learn that there are “multiple offers”.  This could mean that there is one other offer besides yours, or there could be 20.  There is no way to know for sure.  Sometimes your agent can get more information from the listing agent, but normally that information is not given out.  At this point you may be asked to submit your “highest and best”.  In this situation don’t waste your time trying to strategize, or figure out where theother buyers are at.  Just offer a little more in purchase price.  We always advise our clients come up at least $1,000.  This is just to show you are willing to work with the bank.  It usually works, but sometimes there is someone else who is willing to overpay.  Don’t over pay!  If you absolutelyrefuse to come up in price, then change some of your offer terms like your escrow period, or inspection timelines.  If you submit an unreasonably low offer, keep in mind that you may not even be asked for “highest and best”.  Sometimes the bank will choose a couple of strong offers in a multiple offer situation and throw out the rest.  It is important to come in strong from the beginning.


Be patient and don’t get discouraged


Being a buyer in the current market takes patience and a thick skin.  Be prepared to make several offers.  Remember, you are competing withmany other buyers/investors with deep pockets.  If you miss out on a property that was “the one”, make sure your real estate agent keeps in touch with the listing agent during the escrow.  Escrows fall out all the time, especially with distressed sales.  If you stay on top of things, you may be able to resubmit your offer again before the property goes back on the market. 


 


An Accepted Offer


When you have received word that the bank is accepting your offer you will need to act fast.  First the bank will send you what’s called a “counter addendum”.  It is basically a new purchase contract that supersedes the original that you submitted.  It will tell you how long you have to close, how much the seller will contribute to closing costs and how many days you have to conduct inspections, etc.  All of the banks terms will be on that addendum.   The counter addendum is usually at least 10 pages long or more.  Your real estate agent will go over everything with you and answer any questions.  Remember that you do not have an agreement with the bank until you sign and agree to the terms on that counteraddendum.  Until the bank receives it back from you signed and they have in turn signed the addendum, you don’t have a deal.  In this time period another buyer could make a stronger offer on the property, and the bank could decide to go with that buyer instead.  For this reason you will need to act quickly and sign the addendum if you want the property. 


After that, be patient….You may not receive title and escrow information for several days in some cases.  The transaction could go either way: really fast, or really slow.   Keep in mind that the listing agent is actually dealing with an asset manager.  The asset manager is the one who is dealing directly with the bank (seller).  Asset Managers are dealing with a backlog of properties, which can slow down the process significantly.   Just make sure you are diligent on your end and complete your tasks in an orderly fashion.  You do not want to be the party who is slowing down the process.   


 


 


 


 


 


 


 
 ]]> </description>
            <pubDate>Sun, 29 Apr 2012 13:48:37 -0700</pubDate>
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            <guid>http://www.gobrock.com/blog/sacramento-short-sales.html</guid>
            <link>http://www.gobrock.com/blog/sacramento-short-sales.html</link>
            <author>jason@gobrock.com (Jason Brock Lewis)</author>
            <title>Sacramento Short Sales</title>
            <description> <![CDATA[ 
What is a short sale?


Short sales occur when property values have dropped, and the homeowner is unable to sell the property for enough to pay off the debt owed.  A short sale is when a lender allows the homeowner to sell the home for less than what is owed on the mortgage note.  Typically, a lender would rather pursue a short sale and lose less money, as opposed to taking the property back through foreclosure.


 


FOR BUYERS: Advantages of a short sale






A buyer may have an opportunity to purchase a property below current market value (Not guaranteed).  Most lenders require at least 90% of the current market value for the home, so buyers have a chance to purchase a property at a discount of up to 10%.






The condition of the home is usually better than that of a foreclosure.  Extensive vandalism and damage may occur more frequently on a foreclosure.






Since a property owner is responsible for the condition of the property until title is transferred, it is less likely that vandalism will take place.  






FOR BUYERS: Disadvantages of a short sale






TIME – Short sales can take a considerable amount of time to complete.  Some Sacramento short sales can receive approval in 6-8 weeks, but most take 90 – 120 days or more.  A buyer is at risk of investing time in a short sale, only to have the deal fall apart as there are no guarantees.  Even though a lender has agreed to do a short sale, it does not guarantee final approval.






MONEY – A seller that is near foreclosure will rarely have the means to keep up the maintenance of the home, nor make any requested repairs.  Short sales are sold “As Is”.






Neither the lender nor the seller will pay for items normally covered in a traditional sale.  This includes things like: pest/termite inspections, home protection plans, etc.






SECOND MORTGAGES – If there are two loans against the property, this could pose a problem for a potential buyer.  The lender in first position always has first priority.  Depending on the sale price of the home, the second lender may not receive anything at all.  Therefore, the second lender may not agree to a short sale.  The first lender will need to give something to the second, or it will prevent the short sale approval.  Either way a buyer can expect further delay in order to satisfy the demands of the second lender.






SELLER MOTIVATION – As a buyer looking at short sales, you may start to see homes that have been sitting on the market for extended periods of time without offers.  Usually these listings will have restricted showing times that may seem unreasonable.  As agents, sometimes we come across other agents who have little or no communication with the sellers of their short sale listings.  This is normally because once a seller realizes the implications a short sale will have on his/her credit, their living situation, and their future, they can become uncooperative with the process.  A buyer will need to remember that these are people who are essentially losing their homes.  Most of them have no intentions of ever buying a home again, at least in the foreseeable future.  This type of attitude is self-defeating, but understandable.  This will cause even more delay in the process.  A seller stands to make nothing on a short sale.






 


Why do banks grant short sales?


A short sale is granted for 2 reasons:


1.)    Seller Hardship:






Loss of employment






Reduced Income






Medical Emergencies






Divorce






Bankruptcy






Death






 


2.)    Declining property value:






Lenders are aware of the decline of property values.  They know that the seller owes more than what the home is worth.  A foreclosure is more costly for a lender in the long run






 


FOR BUYERS: The short sale process


The following steps are what a buyer might expect after they have written their offer and the seller has accepted:


1.)    Offer package is submitted to the bank.  The package will not only include the buyer’s purchase agreement, prequal letter, and earnest money deposit, but will include a complete financial package from the seller.  The seller financial package will have things like:






CMA (Comparative Market Analysis) with a list of recent comparable sales.






Seller’s hardship letter






2 years tax returns






2 years of W-2’s






Recent payroll stubs






Recent bank statements






Letter of authorization so the listing agent is able to communicate with the lender during the short sale






HUD -1 (Preliminary net sheet)






2.)    Bank acknowledges receipt of the package.  This can take anywhere from a week to a month, or more.


3.)    A short sale negotiator is assigned and a BPO is ordered (Broker’s Price Opinion).  This can take 30 – 60 days, and more than likely the bank will not      share the results of the BPO.


4.)    The file is sent off for review to the lienholder.  This can take another 30 days.


5.)    The bank may have all parties involved sign an Arm’s Length Affidavit.


6.)    The bank issues a short sale approval letter.  It will include the approval price, and a specific time frame for the buyer to close escrow.


7.)    Buyer begins their loan process, and hopes they can close on time.


Throughout the whole process, buyers can become impatient and frustrated.  Often times they cancel midway through the process to pursue other properties.  The agent is then left to put the house back on the market to procure a new buyer, and start the process over again.


 


CAUTION:


There are always unknowns and surprises that arise in the short sale process.  Every bank has a different protocol when processing short sales.  Therefore timelines will vary.  Some things a buyer should consider are:






A short sale might seem like a good deal at first, but often times this may not turn out as the buyer originally expected






A buyer should not assume that just because a lender is already willing to take a loss on a short sale, that they will consider low ball offers.  Buyers beware that a low offer can be rejected instantly by the bank.






Be aware of properties that are listed below fair market value.  The actual price of the short sale may have nothing to do with the current market value; in fact, they are priced low in order to generate multiple offers.  






Remember that just because a seller has accepted a buyer’s offer, it does not mean that the bank will approve the short sale.






A buyer may have to spend money out of his/her own pocket for inspections, appraisals, or repairs in order to satisfy the requirements of their loan.  The seller and/or bank will not pay for any repairs, the home is sold strictly as-is on a short sale.






Although the short sale process has become more streamlined over the past couple of years, remember that each bank has its own short sale procedure.  Experienced Real Estate Agents may not be able to accurately predict the bank timelines and requests.






 


TIPS FOR BUYERS:






It is important to hire an agent with experience in short sales in order to protect your interests, and expedite the process.






It is best if your agent sends a list of current and accurate comparable sales with your offer to support the price you are offering on the home.






Indeed it is possible to buy a short sale below market value.  However, keep in mind that the bank knows what the home is worth.  Don’t expect a discount more than 10% of the fair market value.






It is important for your agent to call the listing agent regularly for status updates on the short sale.  Careful notes should be taken during the whole process.






The value of the home is based on recent comparable sales, not what is owed on the mortgage.






Banks will approve short sales based on the hardship of the seller, and the current value of the home.






It is a good idea for a buyer to look for short sales that are already approved by the bank.  This happens when a buyer is in place for the majority of the process, and then backs out when there is an approval from the bank.  Most of the leg work has already been done, and there is an opportunity for another buyer to step in.






Understand the risks involved with short sales before you decide to pursue one.  Speak with your agent, weigh your options, and really think about whether or not you can handle the process.






BE PATIENT!  Put your offer in and forget about it!  Don’t continue to look at other short sales and put in offers all over the place.  Not only are you putting all of those sellers at risk of foreclosure should you cancel, but you are possibly lengthening an already lengthy process for yourself.




 ]]> </description>
            <pubDate>Fri, 03 Feb 2012 17:53:53 -0800</pubDate>
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            <guid>http://www.gobrock.com/blog/foreclosure-filings-down.html</guid>
            <link>http://www.gobrock.com/blog/foreclosure-filings-down.html</link>
            <author>jason@gobrock.com (Jason Brock Lewis)</author>
            <title>Foreclosure Filings Down</title>
            <description> <![CDATA[ 
Foreclosure filings and repossessions fell to their lowest level since 2007 last year.


Totalfilings, including default notices and bank repossessions were down 33% for theyear to 2.7 million, according to RealtyTrac, the online marketer of foreclosedproperties.


Onein every 69 homes had at least one foreclosure filing during the year, while 804,000homes were repossessed. That's a significant improvement from the peaks reachedin 2010 -- when 1.05 million homes were repossessed -- and the lowest levelsseen since 2007.


More than 4 million homes have been lost to foreclosure over the past five years.


While the declines seem like good news for the housing market, where a flood offoreclosed homes has depressed home prices, much of it is due to processingdelays caused by fall-out from the "robo-signing" scandal that brokein late 2010.


During the year, banks spent more time making sure paperwork was legal and proper,creating a backlog in the foreclosure pipeline. As a result, the average timeit took to process a foreclosure climbed to 348 days during the fourth quarter,up from 305 days a year earlier. 


"Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosureactivity for the year," said Brandon Moore, chief executive officer ofRealtyTrac.


However, Moore said there were "strong signs" during the second half of theyear that lenders are working through foreclosure backlogs in certain markets.He expects foreclosure activity to rise above 2011's level but remain below thepeak hit in 2010.
 ]]> </description>
            <pubDate>Sat, 21 Jan 2012 07:40:38 -0800</pubDate>
                    </item>
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            <guid>http://www.gobrock.com/blog/my-first-blog-entry.html</guid>
            <link>http://www.gobrock.com/blog/my-first-blog-entry.html</link>
            <author>jason@gobrock.com (Jason Brock Lewis)</author>
            <title>California Home Sales Slump 5.8%</title>
            <description> <![CDATA[ 
Sales of existing single-family homes in California fell 5.8 percent from April to May to a seasonally adjusted annual rate of 471,480 units, according to statistics collected by the California Association of Realtors from 90 Realtor associations and multiple listing services.


That's a 14.4 percent decline in sales from the same time a year ago, when federal homebuyer tax credits were still in effect.


At $291,760, the median sale price of existing single-family homes in California during May was down 0.7 percent from April and 10.9 percent from a year ago.


"The monthly decline in sales and the median home price reflect the slowdown in the economic recovery over the past couple of months, which has affected virtually all aspects of consumer spending," said CAR Chief Economist Leslie Appleton-Young in a statement.


 
 ]]> </description>
            <pubDate>Fri, 22 Jul 2011 14:27:14 -0700</pubDate>
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